7 Tips on Combating Payment Fraud

If you own or operate a business, it’s important to be aware of the various types of payment fraud and how they can affect your bottom line. Payment fraud is defined as any type of illegal activity that results in the unauthorized use of another person’s or entity’s payment information—such as credit card numbers, bank account information, or Social Security numbers—to make a purchase or withdraw funds.

According to a recent report from the Association of Certified Fraud Examiners (ACFE), businesses lose an average of 5% of their annual revenues to fraud. And with businesses expected to lose nearly $50 billion to fraud this year, it’s clear that this is a major problem. So, what can you do to protect your business? Let’s take a closer look.

Common Types of Payment Fraud

There are many different types of payment fraud, but some are more common than others. Here are four of the most common types of payment fraud that businesses need to be aware of:

  1. Credit card fraud: This type of fraud occurs when someone uses a stolen or fake credit card to make a purchase without the cardholder’s permission.
  2. ACH fraud: ACH fraud occurs when someone uses stolen banking information to withdraw funds from another person’s account or to make an unauthorized electronic transfer.
  3. Check fraud: Check fraud occurs when someone uses stolen or fake checks to withdraw funds from another person’s account or to make an unauthorized purchase.
  4. Identity theft: Identity theft occurs when someone uses another person’s personal information—such as their Social Security number, driver’s license number, or date of birth—to open new accounts, make purchases, or commit other crimes.

Tips for Preventing Payment Fraud

Now that we’ve taken a look at some of the most common types of payment fraud, let’s discuss some tips for preventing it:

  1. Educate your employees: Your employees are on the front lines when it comes to detecting and preventing payment fraud. Be sure to educate them on the various types of fraud and what red flags to look out for.
  2. Implement proper controls: There are many different controls you can put in place to help prevent payment fraud, such as requiring dual approval for large purchases or monitoring employee spending patterns for unusual activity.
  3. Use data analytics: Data analytics can help you detect fraudulent activity by identifying patterns and anomalies in your data. For example, if you notice a sudden spike in returns from a particular customer or location, that could be a sign that something is amiss.
  4. Invest in security measures: There are many different security measures you can put in place to help prevent payment fraud, such as installing CCTV cameras, using access control devices, and shredding documents with sensitive information.
  5. Purchase insurance: In the event that your business does become the victim of payment fraud, having insurance can help mitigate the financial losses incurred.
  6. Stay up-to-date on compliance: Compliance requirements related to payment processing are constantly changing, so it’s important to stay up-to-date on the latest developments. Not only will this help you avoid costly penalties, but it will also help you keep your customers’ data safe and secure.
  7. Work with a reputable processor: When choosing a payment processor, be sure to do your research and choose one with a good reputation. A reputable processor will have strong anti-fraud measures in place and will be able to provide expert guidance on how to best protect your business from payment fraud.


As we’ve seen, payment fraud is a serious problem that can cost businesses millions of dollars each year. However, by taking steps to educate your employees and implement proper controls, you can help prevent fraudulent activity and protect your business from financial losses.

At Global Legal Law Firm, our lawyers are familiar with the rapidly changing nature of electronic payments processing, and the ever changing regulations involved, with decades of expertise in ISOs, processors, commercial collections, credit card brands, and other forms of electronic payment processing litigation. Let us guide you through this new and volatile environment, rather than attempting to navigate it on your own.

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